Public Prosecutor v Leng Kah Poh

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 17 October 2014
• Neutral Citation: [2014] SGCA 51
• Plaintiff Counsel: Tan Ken Hwee, Sandy Baggett, Sherlyn Neo and Eugene Sng (Attorney-General's Chambers)
• Docket Number: Criminal Reference No 2 of 2013
• Date: 17 October 2014
• Hearing Date: 06 May 2014
• Subject Matter: criminal references,Criminal procedure and sentencing
• Published date: 28 October 2014
• Citation: [2014] SGCA 51
• Defendant Counsel: S K Kumar (S K Kumar Law Practice LLP)
• Court: Court of Appeal (Singapore)
• Year: 2014

Chao Hick Tin JA (delivering the judgment of the court):

This is a criminal reference that arises from a decision by the judge (“the Judge”) in Leng Kah Poh v Public Prosecutor [2013] 4 SLR 878 (“the Judgment”). Pursuant to the application, the Public Prosecutor (“PP”) has referred two questions of law of public interest to this court which relate to the interpretation of s 6(a) of the Prevention of Corruption Act (Cap 241, 1993 Rev Ed) (“PCA”). This issue of interpretation arose as a result of the atypical factual matrix of the case.

Background Facts

The respondent in this reference (“the Respondent”) was the food and beverage manager at IKANO Pte Ltd, a Singapore company that operates the IKEA furniture stores in Singapore (“IKEA”).

AT35 Services (“AT35”) was a sole proprietorship registered by Andrew Tee Fook Boon (“Andrew”). Initially, AT35 was a waste management company.

Sometime in October, Andrew was approached by Gary Lim Kim Seng (“Gary”) to convert AT35 into a food supply business. Later in the same month, Andrew met Gary and the Respondent in a coffee shop in the Bishan area and a plan was hatched to supply food to IKEA through AT35. Gary and Andrew each contributed $30,000 in cash to start AT35’s new food supply business but the Respondent made no direct cash contribution. Andrew was the primary manager of AT35. Later, when the value of AT35’s sales to IKEA Singapore increased, Gary and Andrew decided to set up Food Royal Trading (“FRT”), which was intended as a means to reduce the tax burden on the sales made to IKEA.

AT35 and FRT became the exclusive suppliers of chicken wings and dried food products to IKEA. The two entities had no other business or clients besides IKEA. The modus operandi of AT35 and FRT was as follows: they obtained food supplies from a food supplier with instructions for that supplier (Tenderfresh, in AT35’s case) to package its products in unmarked clear plastic bags and sold them to IKEA at a marked up rate. AT35 and FRT did not add value to the products: they merely transported the products straight from its supplier to IKEA. Where storage of the products was necessary, AT35 stored the products in rented cold rooms in Jurong and Defu industrial estates. AT35 did not have any cold rooms or storage facilities of its own. AT35 and FRT were effectively special purpose vehicles to carry out a scheme which allowed Gary and Andrew to skim money off the top of food contracts with IKEA and share it with the Respondent. Over a period of seven years, AT35 and FRT made a profit of $6.9m and the Respondent was given a one-third share of it, ie, $2.3m.

The Respondent was charged with 80 counts of corruptly accepting gratification under s 6(a) of the PCA. The first charge is reproduced below:

You, … are charged that you, on or about the 24th day of January 2003, in Singapore, being an agent, to wit, a Manager in the employ of IKANO Pte Ltd, did corruptly obtain for yourself a gratification of a sum of about $14,125 (Fourteen Thousand One Hundred and Twenty-five Dollars) from one [Gary] Lim Kim Seng, as a reward for showing favour in relation to your principal’s affairs, to wit, by being partial in placing orders for food products with AT35 Services and Food Royale Trading, and you have thereby committed an offence punishable under Section 6(a) of the Prevention of Corruption Act, Chapter 241.

The other charges were similarly framed but pertained to different amounts of gratification the Respondent received over the course of the seven years.

At a trial before a district judge, the Respondent was convicted on all 80 charges and was sentenced to 14 weeks’ imprisonment per charge. The district judge ordered seven out of the 80 sentences of imprisonment to run consecutively for a total sentence of 98 weeks’ imprisonment. The Respondent appealed against conviction and sentence, and on appeal, the Judge reversed the district judge’s finding that the PP had proven its case beyond a reasonable doubt. The Judge allowed the appeal, and accordingly acquitted the appellant of the charges.

The Judge’s decision

In reversing the district judge’s decision, the Judge did not disturb the former’s findings in relation to the Respondent’s role in the arrangements with AT35 and FRT to supply goods to IKEA. What was of concern to the Judge were the district judge’s findings in relation to the corrupt element of the transaction and the Respondent’s corrupt intent or guilty knowledge (at [6] of the Judgment).

The Judge’s decision centred on the interpretation of s 6(a) of the PCA (“s 6(a)”) as to whether there was in fact any inducement of the agent (ie, the Respondent) by a third party (ie, AT35 and FRT). His starting premise was that under s 6(a), there had to be at least three parties for a corrupt transaction to take place: first, there must be a principal whose loss is at issue; second, an agent of the principal whose corrupt intention is in issue; and third, the third party, who induced the agent to act dishonestly or unfaithfully in relation to his principal’s affairs. In relation to s 6(a), the Judge was of the view that it was not sufficient that a person convicted under that provision was dishonest: there must be an inducement on the part of the third party to the agent, for the agent to act in a certain way, that is, the third party must seek “to prevail on, make, cause, encourage (the agent to do something)” (see [8] of the Judgment). Therefore, an agent who has acted with dishonest intent and has interfered with the affairs of his principal, but has not been induced to do so by a third party may be guilty of some other crime of dishonesty, but would not be guilty of corruption as defined under the PCA. If, and as in fact was the case, the nature of the arrangements which the Respondent made with AT35 and FRT were such that the Respondent was the master mind, or a co-conspirator, then it can hardly be said that the Respondent had been induced or bribed to do the allegedly corrupt acts.

The district judge found that Andrew had not explicitly stated the reason why the Respondent was paid huge sums of money by AT35 and FRT. Andrew had denied, at trial, the existence of a legitimate reason to pay the Respondent, and from this the district judge drew the inference that the Respondent was paid for the illegitimate reason of showing favour and allowing the arrangement with IKEA to continue. On the other hand, the Judge found that Andrew was not the master mind of the scheme and came to partake in the scheme late. Andrew did not understand the full relationship between Gary and the Respondent either. This explained why Andrew could not state the reason why the Respondent was paid huge sums of money (at [11] of the Judgment).

The Judge disagreed with the district judge’s inference that there was a corrupt element to the arrangement between Gary and the Respondent where the latter would be paid in order for AT35 to be given “business” by IKEA. The circumstances showed that the agreement for AT35 and FRT to be given “business” by IKEA was initiated by the Respondent or by both the Respondent and Gary (at [12] of the Judgment). Given the following considerations, the Judge found it unlikely that Gary hatched the scheme himself. First, the Respondent had discussed splitting profits “from day 1” with Gary. Second, Andrew was merely a participant who came into the picture late when the scheme had already been formed. Third, the scheme was an elaborate one which involved the use of special purpose vehicles and profiteering from contracts with IKEA, with the Respondent keeping his distance from the vehicles used to carry out the scheme. Fourth, the Respondent was also crucial as an insider that enabled the scheme to be implemented. In truth, it was likely that Gary and the Respondent had “landed on the idea together” and used AT35 (and later also FRT) as vehicles for the scheme to be carried out. The Judge thus found that the district judge’s finding that the Respondent was not involved in the original scheme but was being induced to participate was, at best, “ambiguous”. In his words, there was “a reasonable chance” that the Respondent was effectively paying himself in a profit-sharing scheme where he received a third of the profit and which also indicated some element of equal ownership over the scheme (at [13] of the Judgment).

In the result, the Judge found that the Prosecution had not proven beyond a reasonable doubt that there were three separate parties and that the Respondent was being induced as IKEA’s agent by a third party to act in a particular way in relation to his principal’s affairs. The Judge held that the district judge was wrong in finding that there was a corrupt element in the Respondent being induced to participate in the arrangement rather than coming up with the arrangement himself (at [13] of the Judgment). Instead, the Judge viewed the entire arrangement as one where the Respondent had come up with the idea of making use of his position within the principal in order to earn secret profits which he would share with the partners he intended to bring in to carry out the scheme. The profits from AT35 and FRT were not rewards given to him as a form of gratification, but rather secret benefits he had made from the scheme he had hatched; the profits made by the Respondent were not unlike those made in the situation where a director acted in conflict with the interest of his company and obtained a secret profit for himself and thereby giving rise to a civil claim by the company against him (at [14] of the Judgment). Therefore, the appellant was not induced by another party to carry out the alleged acts against his principal. As that element of the charge had not been made out, the Judge acquitted the Respondent of the charges.

The criminal reference

After the Judge gave his decision, the PP filed a criminal reference on 16 October...